The same day Bao Yugang bought the Wharf and Cheung Kong Industrial shares from Lin Baicheng, he contacted Li Ka-shing and arranged to meet the next morning.
At 10 a.m. the following day, Bao Yugang and Li Ka-shing met.
"Mr. Li, these are the 5.9 million shares of your company that I purchased from Mr. Lin. Please take a look."
What Bao handed over were, of course, photocopies, not the actual share certificates—after all, their transaction had not yet begun.
"Why is it only this much?"
Li Ka-shing looked through the documents, puzzled.
"I remember that when Lin Baicheng's assistant, Cheng Yufeng, contacted me, he said Lin held 20% of the shares. Was he lying to me at the time?"
"Mr. Lin's holdings aren't quite 20%, but they're close," Bao Yugang replied.
He paused, then continued:
"Mr. Li, Mr. Lin kept 2 million shares—5%. He said unless you sell all your Wharf shares to me, he intends to keep that 5%."
"Although I didn't buy all of Mr. Lin's Cheung Kong Industrial shares, the 5% he kept isn't enough to affect your control over the company. So I hope you'll sell me the 5 million Wharf shares you promised. As for your remaining shares beyond that commitment—if you're willing to sell, great. If you prefer to hold, I won't push."
Li Ka-shing replied calmly:
"If Lin wants to hold that 5%, then let him."
He added an explanation:
"Mr. Bao, since I already promised you, I won't go back on my word. But I'm still very optimistic about Wharf's future—otherwise I wouldn't have attempted to acquire it in the first place. Unfortunately, Lin Baicheng's involvement ruined that plan."
"But now that you're the one acquiring Wharf, I can promise you this: if at any point your acquisition runs into difficulties and you need the remaining shares I hold, I will sell immediately without hesitation."
The difference between selling now and selling later could be enormous. Li Ka-shing understood this clearly:
If the takeover turned into a stalemate, both sides would push the share price up, greatly increasing the value of his remaining shares.
If Bao Yugang acquired Wharf smoothly, Li could hold onto his shares until its valuation rebounded and profit handsomely.
In either case, future profits would outweigh selling now.
"Then I'll thank Mr. Li in advance," Bao Yugang said with a smile.
He could easily guess Li's intentions, but since the shares were in Li's hands, he couldn't force the matter. It was better to simply let it slide.
Li Ka-shing then said:
"Mr. Bao, there's also something I'd like your help with."
"Please go ahead, Mr. Li."
"I already hold about 40% of Cheung Kong Industrial. I can't buy all of the nearly 15% of shares Mr. Lin sold."
"To prevent these shares from ending up back in Lin's hands, I'd like to ask you to hold 10% of them. I'll buy the rest myself."
This was unavoidable. In Hong Kong, a shareholder cannot hold 50% of a listed company; exceeding that forces a reduction in holdings. Reaching 75% triggers a full takeover offer at the highest price within the past six months.
Thus, Li Ka-shing could only acquire part of the shares and needed another reliable party to hold the rest. To ensure those shares didn't eventually flow back to Lin Baicheng, he chose Bao Yugang—who he believed would not sell to Lin under these circumstances.
Of course, he couldn't say "never." Li knew very well:
if the price is high enough, not only other shareholders—even he himself would consider selling.
Bao Yugang nodded:
"No problem. I believe Cheung Kong Industrial will prosper under your leadership. It's a worthwhile long-term investment."
Li Ka-shing was pleased; he had expected Bao would agree.
Then he asked:
"By the way, Mr. Bao—Lin sold his Wharf shares to you because he's planning to acquire another company, right?"
Bao smiled:
"It seems Mr. Li has figured it out."
Having already completed the transaction with Lin Baicheng, and knowing Lin had purchased a large block of Hutchison Whampoa shares from HSBC, Bao saw no reason to hide it. The news would spread soon enough.
"That's right. When I met Mr. Lin, he was determined to acquire Wharf. But after realizing HSBC held a huge stake in Hutchison Whampoa, he asked me to act as a middleman and help him negotiate with HSBC."
"So that's how it is… I didn't expect he'd come up with such a clever solution!"
Li Ka-shing was amazed—and frustrated.
If he had thought of this when he first approached Bao Yugang, he might have been the one buying Hutchison Whampoa from HSBC instead. Even though he didn't have enough cash on hand, he could've found a way.
Opportunities like this appear once and never again.
Bao Yugang sighed with admiration:
"I was surprised too. Don't underestimate Mr. Lin—he may be young, but he's absolutely a business prodigy. You can't take him lightly."
It was a pointed reminder. Bao could see clearly that conflict had already formed between Li Ka-shing and Lin Baicheng. A clash between them was only a matter of time. This was his subtle warning to Li not to underestimate his young rival.
Li Ka-shing nodded solemnly:
"Yes… he must not be taken lightly."
After seeing Lin's clever maneuver, he knew that underestimating him could lead to disaster—an error a seasoned businessman like him would never make.
Bao Yugang said no more. He maintained good relationships with both Lin and Li and wasn't about to take sides. A single reminder was as far as he would go.
That afternoon, they completed their transaction:
Li Ka-shing sold 5 million Wharf shares to Bao Yugang.
Bao sold 1.9 million Cheung Kong Industrial shares to Li.
Bao kept 4 million shares for himself, as Li requested.